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Breaking Down Reverse Mortgages

By Al Twitty | August 25, 2016

Most of us have seen the TV commercial where some celebrity or another tells us about reverse mortgages. But what is a reverse mortgage and what can you expect during the process?

It’s The Same, Just Different
When you bought your home there was a process involved after you and the seller signed the purchase agreement, there are similarities here so it really isn’t some strange netherworld-like adventure. You’ve already experienced much of this.

Déjà vu All Over Again
When you first bought your home, it’s most likely there were professionals involved from the start and so, again, that’s probably a good place to begin. After going online (and really isn’t the internet where we start so many hunts for information these days?) I found a helpful site named, aptly enough, There was a plethora of useful, easy to understand information to be found there like infographics about reverse mortgages.

Reverse Mortgage paper message on assorted cash

Reverse Mortgage paper message on assorted cash

When you first bought your home a professional appraiser had to view the property and render an opinion of market value before the lender would loan on the house. The same is true with a reverse mortgage. The company doing your reverse mortgage has to know the market value of the property to determine the amount of equity in the home (market value less any debt).

There may even be a home inspection that helps everybody understand the actual structural integrity of the different components of the house. Things like the roof, the foundation, HVAC and many others. It’s very important to understand the difference between an appraisal and a home inspection. A nice infographic giving a quick overview can be found here.

A Retirement Income Option
As the bulk of the Baby Boomer generation approaches retirement age, there are a good number of people asking themselves “what can I do to make sure I have the money I need?” A reverse mortgage can be one piece to that complex puzzle. By and large, the largest single asset the average person owns is their home. Just as a home shelters us from the elements, it can help shelter the financial problems those approaching their Golden Years might face.

Many people have taken advantage of FHA financing in purchasing their homes in the first place. Well, there are also FHA programs for reverse mortgages and HUD has put out some information that can help in going through this process.

It’s Just Not That Simple Anymore
Social Security was originally intended as an insurance program where many people pay in over their working years, the money was to be invested and then those people could depend on a monthly stipend to live on in their retirement years. However, after decades of governmental chicanery, it just got broken. So now we have to piece together a system pretty much unique to each individual/family.
Fortunately, there is an abundance of information on the web to help you begin to get a handle on how various aspects of your retirement planning go together and a look at some numbers on how a reverse mortgage can help with any shortfall in your financial needs.

Being Forewarned Is Being Forearmed
The information on these sites provides a great set of basic tools to help people understand what their accountant, stock broker and other financial advisors are telling them. Every profession has its own jargon that can sound like gibberish to an outsider. With the information available on the net today, someone considering a reverse mortgage can have a little better understanding of the language the pros are using. It may “only” give you the tools to stop and ask intelligent questions, but quite often that can be the most important tool in the chest. “A prudent question is one-half of wisdom.” – Sir Francis Bacon

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